While preparing New Zealand income tax and GST returns we are noticing a tendency for clients to claim a tax deduction for parking fines, late fees charged by the New Zealand Companies Office and the like.
Unfortunately, the tax rules ensure you do not get a benefit from being naughty.
The general premise is that allowing government-imposed penalties to be tax-deductible would give business people an advantage over non-business people for acting unlawfully.
It would not be considered fair play.
Incidentally, because statutory fines are neither a “good” or a “service” they do not include a GST content either.
Therefore you should not be claiming them in either your New Zealand GST returns or your income tax returns.
Incidentally, parking “fines” issued by private parking companies are not statutory fines and, for that reason, are generally deductible providing the usual business test for tax deductibility is met.
And because they are a “service” provided to a shopping mall, car park owner or whatever, these types of costs should have a GST content if the service provider is GST registered.
We suggest you contact us to discuss whether the “fine” imposed by that third party during your sales trip to New Zealand is, in fact, deductible for New Zealand tax and/or GST purposes.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.